Well; I’m not saying ‘Austrian Economics’ ‘relies’ on such an assumption, but it is true that a lot of what’s in MES does not apply to a world with relative scarciy of land over labor and a world with completely specific factors of production, or a world completely non-specific factors, or in a world with no natural inequality, … But we most definitely can have AE in a world with a different kind of a natural environment. We don’t ‘need’ these things to do economics. But we do need them to have (certain) economic theories that are relevant for the world we live in.
Al of these things do not follow from the action axiom. It is true that these things are relevant in the world as we know it, that’s why Rothbard called it an ‘empirical axiom’. Would you agree that they are contingent and could be different? (Unlike the concept of ‘means and ends’ with are implied and necessary when you talk about action.)
I really don’t care how you call it; as long as you recognize that big parts of MES explicitly are only relevant in a world where these contingent facts hold. If we can agree to that; than it doesn’t really matter wether or not you call it an assumption. Maybe I’m using the word ‘assumption’ wrong; but then so is Rothbard (MES, pg. 43, footnote 27):
“This is the first proposition in this chapter that has not been deduced from the axiom of action. It is a subsidiary assumption, based on empirical observation of actual human behavior. It is not deducible from human action because its contrary is conceivable, although not generally existing.”
(This being: “And, finally, there is a third limitation on the supply of labor: whether or not the work is directly satisfying in itself, labor always involves the forgoing of leisure, a desirable good.”)
Or on pg. 336:
At this point, we may introduce another rare, explicitly empirical, element into our discussion: that on this earth, labor has been a far scarcer factor than land. As in the case of Crusoe, so in the case of a modern economy, men have been able to choose which land to use in various occupations, and which to leave idle, and have found themselves with idle “no-rent” land, i.e., land yielding no income. Of course, as an economy advances, and population and utilization of resources grow, there is a tendency for this superfluity of land to diminish (bar- ring discoveries of new, fertile lands).
Again; I could call this an assumption. This (empirical) assumption is necessary, because other things explained in MES would be different in a world where this assumption wouldn’t hold. Again: we can have AE in a world where this isn’t the case. But certain theories that are part of the body of AE right now, are only relevant in a world where this is true. How would you call this? What other word grasps this concept better than an contingent, empirical assumption?
Feel free to call it an heuristic tool if you want, but the monetary profit-thingy has been used by austrian economists as a means to explain certain ideas. You can call it a mental tool to facilitate certain things when talking about results. It doesn’t mean that we ‘assume’ that people always strive for monetary profit. This is false; we can only say (as economists) that people only strive for psychic revenue. But we can say ‘let’s, for the sake of making the next theory easier, that people just aim for monetary benefits. This is obviously wrong; people have a whole lot of different aims. But just to clarify an idea, it’s easier if we just assume that people strive for monetary returns.’ Or are you saying that this is (1) anti-Austrian, (2) un-scientific, or in any way (3) never done by Austrians? I don’t see the big problem with that. Could you explain me why you oppose this so much? And if so, why?
Or are you honestly saying that it doesn’t matter for MES wether or not there is a relative scarcity of land over labor or vice versa? That it wouldn’t matter for MES wether or not all goods are completely specific or completely heterogeneous? It doesn’t matter for the project of AE in general; we can have economics in a world where these contingent things are true. But it would matter for a great deal of the body of Austrian economics we have know, e.g. capital theory would be completely different. So while it is true that the only thing that’s always true is the action axiom, beyond a certain point you need certain general empirical ‘axioms’ (as Rothbard calls it) to advance in your knowledge about the world we live in.
I’m by the way not saying that the ‘land over labor’ contingent, empirical assumption is the same kind as the monetary profit assumption. The first one is ‘necessary’ to push AE towards more knowledge in a world where there is a relative scarcity of land over labor. We can also construct a theory where it is the other way around, but we grasp the world we live in as being different. This is however not an assumption on human behavior as such.
The other one is ‘just’ a heuristic means which we know is false, but it can be used to explain a certain concept, that we can then widen to incorporate the whole of human ends. The reason why I defend this assumption so ‘hard’ is that it’s basically an assumption about ends, while economics is mainly about means. For the sake of clarification we can illustrate the means/ends relationship by assuming a certain end, explain how certain means can achieve this end and then generalize.
I also invite other people to shine their light on this. It feels like both DD5 and I are pretty convinced and both are pretty damn sure. So my gut feeling is that we are talking past one another. Anyone feel like sharing his ideas?
